Case Note & Summary
The four first appeals before the Bombay High Court arose out of orders passed by the Small Causes Court in municipal appeals concerning the fixation of rateable value and levy of property tax on certain structures situated on Plot No. 4, East Agripada (North), Byculla Division, Bombay. The property originated from a lease granted in 1921 by the City of Bombay Improvement Trust to one Mohamed Abba Juma for 99 years. Through subsequent assignments, the leasehold rights devolved upon Amritlal Vallabhdas Karia, who entered into a fresh indenture of lease in 1964 with the Municipal Corporation of Greater Bombay, which had succeeded the Improvement Trust. The lessee was permitted to construct structures subject to municipal regulations and to sublet or assign interests. Over time, tenants erected structures, some of which were alleged to be unauthorised, being built without sanctioned plans and occupied without occupation certificates. In 1983, the Municipal Corporation issued special notices under section 167 of the Mumbai Municipal Corporation Act, 1888, fixing or increasing the rateable value of the premises, including these unauthorised structures. The lessee objected, contending that the unauthorised constructions should not be taxed and that the rateable value was excessive. The Investigating Officer rejected the objections on 30 August 1983. The lessee then preferred six municipal appeals before the Small Causes Court. By a common order dated 20-21 July 1989, the Additional Chief Judge of the Small Causes Court disposed of all six appeals, granting part relief in four of them and dismissing the remaining two. The appellants, being aggrieved, filed four first appeals (Nos. 186–189 of 1990) in the High Court under section 218 of the Act. During the hearing, the High Court formulated two substantial questions of law: first, whether land already assessed to general tax could be taken into account again for levying tax on newly erected unauthorised structures; and second, whether unauthorised structures without sanctioned plans and occupation certificates could be subjected to property tax at all. On the first question, the Corporation conceded and the court held that once land is assessed, it cannot be reassessed; only the rateable value of the new building is to be considered. The second question was referred to a Division Bench, which by judgment dated 13 July 2001, held that the Municipal Corporation is entitled to levy property tax on unauthorised or illegal structures. Subsequently, the appeals were placed before the Single Judge, who found that the Small Causes Court had failed to give any reasons for its decision on the fixation of rateable value. By order dated 14 July 2009, the High Court directed that the matter be remanded to the Small Causes Court for fresh consideration with a reasoned order. The judgment of 5 November 2014 recorded these developments and answered the legal issues accordingly, remitting the appeals for rehearing.
Headnote
A) Municipal Tax – Reassessment of Land – Already Assessed Land Cannot Be Reassessed – Mumbai Municipal Corporation Act, 1888 – The court held that once land is assessed to property tax, it cannot be reassessed merely because a new structure has been erected on it; only the rateable value of the new building is to be considered. Held that the Corporation’s submission accepting this position was recorded. (Paras 17-18)
B) Municipal Tax – Unauthorised Structures – Taxability – Mumbai Municipal Corporation Act, 1888 – The Division Bench held that unauthorised structures constructed without sanctioned plans and occupied without an occupation certificate are liable to property tax. Held that such structures are not exempt from taxation. (Paras 19-20)
C) Appeal – Remand for Fresh Consideration – Lack of Reasons in Lower Court Order – Mumbai Municipal Corporation Act, 1888, Section 218 – The Single Judge accepted the submission that the Small Causes Court had not provided any reasons for its decision fixing the rateable value, and directed that the appeals be reconsidered by the lower court with a reasoned order. Held that the absence of reasons vitiated the order and necessitated remand. (Para 21)
Issue of Consideration
1. Whether land already assessed to property tax can be reassessed when a new unauthorised structure is built on it; and 2. Whether property tax can be levied on unauthorised structures constructed without sanctioned plans and occupied without occupation certificate under the Mumbai Municipal Corporation Act, 1888.
Final Decision
The High Court accepted the Corporation's concession and held that land already assessed to property tax cannot be reassessed merely because a new structure has come up; only the rateable value of the new building is to be considered. On the second issue, the Division Bench held that the Municipal Corporation is entitled to levy property tax on unauthorised structures. The Single Judge, finding that the Small Causes Court had not given reasons for its decision, directed the appeals to be reconsidered by the Small Causes Court with a reasoned order.
Law Points
- Land once assessed to property tax cannot be reassessed due to new structures
- Property tax can be levied on unauthorised structures without sanctioned plans and occupation certificate
- Only rateable value of new building considered when land already assessed
- Assessment orders must be accompanied by reasons
Case Details
2014 LawText (BOM) (11) 25
First Appeal Nos. 186 of 1990, 187 of 1990, 188 of 1990, and 189 of 1990
Rajesh Patil with Asmant Nimbalkar for Appellants; Vinod Mahadik for BMC/Respondents
Jagdish Amritlal Karia and Mrs. Anuradha Jagdish Karia
The Bombay Municipal Corporation of Greater Bombay and The Municipal Commissioner of Greater Bombay
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Nature of Litigation
Appeals under section 218 of the Mumbai Municipal Corporation Act, 1888 challenging orders of the Small Causes Court fixing rateable value of properties for property tax assessment, involving issues of reassessment of land and taxability of unauthorised structures.
Remedy Sought
Appellants sought to set aside or modify the orders of the Small Causes Court and the assessment of rateable value on the grounds that land already assessed could not be reassessed and that unauthorised structures were not liable to tax, and that the rateable value fixed was excessive and unreasoned.
Filing Reason
The Municipal Corporation issued special notices in 1983 fixing/increasing the rateable value of the premises, including structures allegedly constructed without sanctioned plans and occupation certificates. The Investigating Officer confirmed the assessments, and the Small Causes Court partly upheld them, leading the landlord to file first appeals.
Previous Decisions
The Additional Chief Judge, Small Causes Court, by a common order dated 20-21 July 1989, granted part relief in four of the six municipal appeals and dismissed the other two. Aggrieved by this order, the appellants filed first appeals in the High Court. The High Court, by order dated 17 June 2000, answered the first legal question in favour of the appellants (land not to be reassessed) and referred the second question to a Division Bench. The Division Bench, by order dated 13 July 2001, held that unauthorised structures are liable to property tax. Thereafter, the Single Judge by order dated 14 July 2009 remanded the matter due to lack of reasons in the Small Causes Court's order.
Issues
While assessing general tax on the structures which have been legally constructed by the appellants, when the entire land (including the land on which unauthorised structures have subsequently come up) has been taken into consideration and the land has been assessed to general tax, can again the same land be taken into consideration for levying general tax in relation to the unauthorised structures?
When admittedly the structures in relation to which property tax or general tax is being levied are unauthorised structures, in the sense that they have been constructed without getting the building plans sanctioned by the Corporation and they have been occupied without the Corporation issuing an occupation certificate, be subjected to levy of property tax or general tax by the Corporation?
Submissions/Arguments
Appellants contended that the rateable value fixed was excessive and that unauthorised structures erected by tenants without their permission and in breach of tenancy terms and municipal regulations could not be subjected to property tax.
The Municipal Corporation submitted that it did not dispute that land once assessed could not be reassessed, but argued that property tax could be levied on unauthorised structures, and the rateable value had been properly fixed after inquiry.
Ratio Decidendi
Land once assessed to property tax cannot be reassessed merely because a new structure has been erected on it; only the rateable value of the new building is to be taken into account. Unauthorised structures constructed without sanctioned building plans and occupied without an occupation certificate are liable to property tax under the Mumbai Municipal Corporation Act, 1888. An order fixing rateable value without reasons is unsustainable and warrants remand for fresh consideration.
Judgment Excerpts
the land which has been assessed to property tax once cannot be again subjected to that purpose merely because a new structure has come up while assessing the new structure (Para 18)
the Municipal Corporation is entitled to levy property or general tax prescribed in case of unauthorised or illegal structures which are constructed without getting the building plans sanctioned by the corporation and which are occupied without the corporation issuing the occupation certificate (Para 20)
the learned judge of Small Causes Court while deciding the four appeals had not given any reasons whatsoever in support of the judgment of dismissal of the four appeals with reference to the question of fixing the rate (Para 21)
Procedural History
The lessee held leasehold rights over Plot No. 4, East Agripada (North), Byculla Division, Bombay, under a lease from the Municipal Corporation. In 1983, the Corporation issued special notices under section 167 of the Mumbai Municipal Corporation Act fixing rateable values. The lessee objected, but the Investigating Officer rejected the objections on 30 August 1983. The lessee filed six municipal appeals before the Small Causes Court. The Additional Chief Judge, Small Causes Court, by a common order dated 20-21 July 1989, granted part relief in four appeals and dismissed two. The appellants then filed four first appeals (Nos. 186–189 of 1990) in the High Court. On 17 June 2000, the High Court formulated two questions of law; answered the first in appellants' favour and referred the second to a Division Bench. The Division Bench by order dated 13 July 2001 held unauthorized structures taxable. The matter came back to the Single Judge, who by order dated 14 July 2009 directed the Small Causes Court to decide the appeals afresh with reasons, leading to the present judgment dated 5 November 2014.
Acts & Sections
- Mumbai Municipal Corporation Act, 1888: 163(2), 167, 217, 218
- Urban Land (Ceiling and Regulation) Act, 1976: 20(i)
- City of Bombay Improvement Act, 1898:
